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2 Suppose the country known as the “Others” is considering the market for volleyballs below. The “Others” are trying to determine whether or not to open their market to trade in volleyballs. Use the graph below for the next three questions. 1. ____ The “Others” decide to trade freely with the rest of the world. If you observe that they export 4000 volleyballs then you can conclude that the price on the world market must be: (a) \$3 (b) \$4 (c) \$5 (d) \$6 (e) \$7
3 2. ____ Over time, the world price rises to \$8/volleyball. The “Others” respond by imposing a \$2/volleyball tax on exports. The shaded area below represents a deadweight loss from the tax that emerges because: (a) volleyballs are consumed domestically that would have been more valuable if exported. (b) too few volleyballs are consumed domestically. (c) too few volleyballs are produced domestically. (d) volleyballs are exported that would have been more valuable if consumed domestically. (e) volleyballs are produced domestically that would have been cheaper to import.

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4 3. ____ While the world price remains at \$8 per volleyball, the “Others” choose to raise their export tax to \$7. Which of the following statements is true? (a) The “Others” will import 8000 volleyballs because the domestic price falls to \$1 and the people of the “Others” will consume more volleyballs then are produced locally. (b) The “Others” will export 8000 volleyballs because the domestic price falls to
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